Leasehold Solutions has labelled evidence by Housing Minister Heather Wheeler MP as ‘factually incorrect’ and a ‘disgrace’. Wheeler was questioned by members of the Housing, Communities and Local Government select committee at the final session of its inquiry into leasehold reform.

Louie Burns, Managing Director of Leasehold Solutions, said: “Based on Heather Wheeler’s statements, it seems she was there to defend the freeholders and to blame leaseholders for the mess they found themselves in. This is surprising, given that the Government she represents has already published a White Paper on tackling the unfair practices in the leasehold system, and promised reforms to make it simpler, fairer and cheaper for leaseholders.

“In fact, Wheeler’s ‘evidence’ was a litany of factually incorrect assumptions. The one thing which became glaringly obvious in the course of her select committee debacle is that she does not understand leasehold at all, which is a disconcerting thing to see in a housing minister.

“For example, Wheeler informed the committee on Monday that not all freeholders monetise ground rents. In fact, I have a database of 1.6 million leasehold properties across the whole country, of which only 891 properties do not have a ground rent fee attached to them. That is only 0.0006% of properties that have no monetised ground rents, which is hardly worth crowing about!”

Wheeler also blamed leaseholders for getting so “caught up in the moment” when buying a home that they simply overlooked the implications of owning a leasehold, and argued that the lease contains all the information a buyer needs to make an informed decision.

Louie continued: “Wheeler is completely wrong on this, as the lease does not spell out the all terms by which the leaseholder will be bound. For example, the terms will not contain: the fees a freeholder will demand for service charges; fees for any ‘major works’ for which the leaseholder will foot the bill; ‘administration fees’ the freeholder will demand for collecting service charges or late ground rent payments; or fees for licences and permissions.

“Perhaps most importantly, the lease terms will not indicate the costs to extend the lease or buy the freehold in the future, which are essential if the leaseholder intends to maintain ownership of their property.

“By citing caveat emptor (“buyer beware”) Wheeler is blaming leaseholders for getting themselves into such a mess. Leases are incredibly complex and often worded in a way that purposefully hides the true meaning of the terms for the freeholder’s benefit.

“Indeed, caveat emptor doesn’t apply to most other consumer purchases, which are covered by legal protection, such as taking out a loan or mortgage, buying a new car or even a toaster. It’s truly shocking that consumers have more legal protection if they buy a toaster for £10 than if they buy a leasehold property for £300,000.”

Mrs Wheeler said she would prefer to rely on developers and property companies voluntarily giving families better terms. She said legal advice showed legislation would be ‘horrendously expensive’, adding: ‘I’d much rather go down the voluntary route.’

Louie explained: “Let’s be very clear here. The leases with onerous terms were written by housing developers and freeholders to maximise their profits at the expense of the leaseholders. The terms did not end up in the lease by accident.

“A voluntary arrangement is a preposterous suggestion that is deeply insulting to the many leaseholders trapped in an exploitative web that has been spun by developers and freeholders in the first place.

“In short, Mrs Wheeler does not understand the many issues that plague hundreds of thousands of leaseholders in the UK and her so-called evidence was a disgrace. Housing ministers these days come and go like buses, so I hope Mrs Wheeler moves on quickly to a role that suits her better.”

Share this article

Comments

There are problems with escalating ground rents and the MPs don't seem to appreciate the vast difference between a ground rent doubling every 25 to 30 years (OK and roughly in line with inflation) and doubling every 10 to 15 years (seriously onerous). However, Louie Burns is also guilty of misunderstanding leases. I comment on his remarks:
"..the lease does not spell out the all terms by which the leaseholder will be bound. For example, the terms will not contain: the fees a freeholder will demand for service charges; fees for any ‘major works’ for which the leaseholder will foot the bill;" This is not correct/misses the point. It is impossible in a 125 year contract to spell out amounts of service charge in future years. It should be well-known that service charges are kept low for the first few years and then increase when the true cost is charged. That said there are substantial statutory protections for tenants and landlords may find they can only recover £250.

" ‘administration fees’ the freeholder will demand for collecting service charges or late ground rent payments; or fees for licences and permissions." Again these cannot reasonably be fixed for 125 years. The fees for collecting SCs and late payments are generally not large. Fees for licences and permissions vary and in some cases tenants are ripped off. However, where a tenant proposes substantial alterations to a flat in a block the landlord has to take professional advice from engineers as to the proposed works. You can't have a blanket "fee" for approving works. It all depends. If the freeholder cannot insist on the leaseholder paying for such professional advice the alternative may be far worse - badly done works that threaten the structure of the block and the safety of residents.

“Perhaps most importantly, the lease terms will not indicate the costs to extend the lease or buy the freehold in the future, which are essential if the leaseholder intends to maintain ownership of their property." What a ridiculous comment! The cost of buying the freehold varies over time and will increase as the lease length shortens.

“By citing caveat emptor (“buyer beware”) Wheeler is blaming leaseholders for getting themselves into such a mess. Leases are incredibly complex and often worded in a way that purposefully hides the true meaning of the terms for the freeholder’s benefit.
I read Wheeler's testimony. She points out that leaseholders can read the lease and if there are 13 pages about fees that would be charged that should hit home.

What nobody has commented on is that buyers, especially first time buyers expect to get their conveyancing done cheaply. Leasehold conveyancing involves at least twice as much work as freehold. It can take several hours to read through a lease and prepare a report on it. It is unrealistic to expect that a senior lawyer will review a 50 page lease if the conveyancing fee is under £1000. That horse has bolted and whilst sellers happily pay 1 1/2 to 2% fees to selling agents, solicitors are lucky to charge 0.5%. Yes leases are complex but some buyers never read them properly. If you can't be bothered to read carefully through a document on a £300,000 purchase then you are a foolish buyer.

I think Louie'scomments are pretty much spot on. Wheeler is just standing up for developers who line the Tories pockets. As for Ian's comments I would suggest that first leases are written in legalese and all the fees and charges are not spelt out clearly. Therefore the vast majority of purchasers dont grasp the issues initially (until of course they are stung). They are only understood by the professionals and freeholder/developers.

Reply to the comment left by Adrian Alderton at 19/02/2019 - 10:46Excellent. Obviously the more signatures the better!
Having never before bought a leasehold property I had cause to dig out my lease a couple of days ago. Lo and behold there is a big problem (ground rent to double every 15 years until the end of never!)
Despite the ridiculous outcome of the consultation, this is an huge scandal that has only just begun to rear it's head.
I am on the case and had an extremely interesting conversation with a specialist today. Don't want to say too much but anyone in the same position can pm me for more details.
Please, please sign the petition even if you are not personally affected.
Thanks
Michelle

When I worked at a mortgage trade body it was brought to my attention that some new homes were being sold with ground rents that doubled every 10 years. After 5 minutes of modelling this on a spread sheet it was clear to me that these properties had NO VALUE because the ground would grow exponentially in real terms. For example, a ground rent starting at a modest £100 would grow to £102,400 after 100 years, (£14,000 in today's money assuming inflation of 2% a year).

I warned lenders but at that time some told me they weren't concerned because they were only lending for 25 years and over this period the ground rent would remain manageable. This is not a good argument as it ignores the long term value of the property, which is fundamentally undermined by the ground rent escalator.

If solicitors and mortgage lenders didn't understand the time bomb of these ground rents how could an average first time buyer? Even a friend of mine who was a professional investor bought a flat with such a ground rent clause - when he realised the implications he sold it. He discovered that the freehold had been sold by the builder (a household name) to a new owner based off-shore so that it was impossible to know the true beneficial owner. This stinks! house builder management knew these ground rents were a rip off - what a way to treat your customers! These, of course, are national house builders that have made a fortune out of the government Help-to-Buy scheme. The government should clamp down on them hard.

You can get free advice from LEASE (you book 15 minute telephone appointments), but they will help you to interpret the (unfair) law and they will help you to interpret parts of your lease you are unsure about.

Previous Article

Next Article

Privacy Policy

Privacy PolicyBACKGROUND:
Property118 Ltd understands that your privacy is important to you and that you care about how your personal data is used and shared online. We respect and value the privacy of everyone who visits this website, www.property118.com (“Our Site”) and will only collect and use personal data in ways that are described here, and in a manner that is consistent with Our obligations and your rights under the law.
Please read this Privacy Policy carefully and ensure that you understand it. Your acceptance of Our Privacy Policy is deemed to occur upon your first use of Our Site. If you do not accept and agree with this Privacy Policy, you must stop using Our Site immediately.

Definitions and Interpretation

In this Policy the following terms shall have the following meanings:

“Account”

means an account required to access and/or use certain areas and features of Our Site;

“Cookie”

means a small text file placed on your computer or device by Our Site when you visit certain parts of Our Site and/or when you use certain features of Our Site. Details of the Cookies used by Our Site are set out in section 13, below;

means any and all data that relates to an identifiable person who can be directly or indirectly identified from that data. In this case, it means personal data that you give to Us via Our Site. This definition shall, where applicable, incorporate the definitions provided in the EU Regulation 2016/679 – the General Data Protection Regulation (“GDPR”); and

Our Site is owned and operated by Property118 Ltd, a limited company registered in England under company number 10295964, whose registered address is 1st Floor, Woburn House, 84 St Benedicts Street, Norwich, NR2 4AB.

Our VAT number is 990 0332 34.

Our Data Protection Officer is Neil Patterson, and can be contacted by email at npatterson@property118.com, by telephone on 01603 489118, or by post at 1st Floor, Woburn House, 84 St Benedicts Street, Norwich, NR2 4AB.

What Does This Policy Cover?

This Privacy Policy applies only to your use of Our Site. Our Site may contain links to other websites. Please note that We have no control over how your data is collected, stored, or used by other websites and We advise you to check the privacy policies of any such websites before providing any data to them.

Your Rights

As a data subject, you have the following rights under the GDPR, which this Policy and Our use of personal data have been designed to uphold:

The right to be informed about Our collection and use of personal data;

The right of access to the personal data We hold about you (see section 12);

The right to rectification if any personal data We hold about you is inaccurate or incomplete (please contact Us using the details in section 14);

The right to be forgotten – i.e. the right to ask Us to delete any personal data We hold about you (We only hold your personal data for a limited time, as explained in section 6 but if you would like Us to delete it sooner, please contact Us using the details in section 14);

The right to restrict (i.e. prevent) the processing of your personal data;

The right to data portability (obtaining a copy of your personal data to re-use with another service or organisation);

The right to object to Us using your personal data for particular purposes; and

If you have any cause for complaint about Our use of your personal data, please contact Us using the details provided in section 14 and We will do Our best to solve the problem for you. If We are unable to help, you also have the right to lodge a complaint with the UK’s supervisory authority, the Information Commissioner’s Office.

For further information about your rights, please contact the Information Commissioner’s Office or your local Citizens Advice Bureau.

What Data Do We Collect?

Depending upon your use of Our Site, We may collect some or all of the following personal data (please also see section 13 on Our use of Cookies and similar technologies):

Name;

Date of birth;

Address and post code;

Business/company name and trading status;

Number of properties owned;

Accountants details;

Contact information such as email addresses and telephone numbers;

Proof of residence and ID;

Financial information such as income and tax status;

Landlords insurance renewal dates;

Property Portfolio details such as value and mortgage outstanding;

How Do We Use Your Data?

All personal data is processed and stored securely, for no longer than is necessary in light of the reason(s) for which it was first collected. We will comply with Our obligations and safeguard your rights under the GDPR at all times. For more details on security see section 7, below.

Our use of your personal data will always have a lawful basis, either because it is necessary for our performance of a contract with you, because you have consented to our use of your personal data (e.g. by subscribing to emails), or because it is in our legitimate interests. Specifically, we may use your data for the following purposes:

Providing and managing your access to Our Site;

Supplying our products and or services to you (please note that We require your personal data in order to enter into a contract with you);

Personalising and tailoring our products and or services for you;

Replying to emails from you;

Supplying you with emails that you have opted into (you may unsubscribe or opt-out at any time by the unsubscribe link at the bottom of all emails;

Analysing your use of our site and gathering feedback to enable us to continually improve our site and your user experience;

Provide information to our partner service and product suppliers at your request.

With your permission and/or where permitted by law, We may also use your data for marketing purposes which may include contacting you by email and or telephone with information, news and offers on our products and or We will not, however, send you any unsolicited marketing or spam and will take all reasonable steps to ensure that We fully protect your rights and comply with Our obligations under the GDPR and the Privacy and Electronic Communications (EC Directive) Regulations 2003.

You have the right to withdraw your consent to us using your personal data at any time, and to request that we delete it.

We do not keep your personal data for any longer than is necessary in light of the reason(s) for which it was first collected. Data will therefore be retained for the following periods (or its retention will be determined on the following bases):

Member profile information is collected with your consent and can be amended or deleted at any time by you;

Anti-Money Laundering information and tax consultancy records are to be kept as required by law for up to seven years.

How and Where Do We Store Your Data?

We only keep your personal data for as long as We need to in order to use it as described above in section 6, and/or for as long as We have your permission to keep it.

Some or all of your data may be stored outside of the European Economic Area (“the EEA”) (The EEA consists of all EU member states, plus Norway, Iceland, and Liechtenstein). You are deemed to accept and agree to this by using our site and submitting information to Us. If we do store data outside the EEA, we will take all reasonable steps to ensure that your data is treated as safely and securely as it would be within the UK and under the GDPR

Data security is very important to Us, and to protect your data We have taken suitable measures to safeguard and secure data collected through Our Site.

Do We Share Your Data?

We may share your data with other partner companies in for the purpose of supplying products or services you have requested.

We may sometimes contract with third parties to supply products and services to you on Our behalf. Where any of your data is required for such a purpose, We will take all reasonable steps to ensure that your data will be handled safely, securely, and in accordance with your rights, Our obligations, and the obligations of the third party under the law.

We may compile statistics about the use of Our Site including data on traffic, usage patterns, user numbers, sales, and other information. All such data will be anonymised and will not include any personally identifying data, or any anonymised data that can be combined with other data and used to identify you. We may from time to time share such data with third parties such as prospective investors, affiliates, partners, and advertisers. Data will only be shared and used within the bounds of the law.

In certain circumstances, We may be legally required to share certain data held by Us, which may include your personal data, for example, where We are involved in legal proceedings, where We are complying with legal requirements, a court order, or a governmental authority.

What Happens If Our Business Changes Hands?

We may, from time to time, expand or reduce Our business and this may involve the sale and/or the transfer of control of all or part of Our business. Any personal data that you have provided will, where it is relevant to any part of Our business that is being transferred, be transferred along with that part and the new owner or newly controlling party will, under the terms of this Privacy Policy, be permitted to use that data only for the same purposes for which it was originally collected by Us.

How Can You Control Your Data?

In addition to your rights under the GDPR, set out in section 4, we aim to give you strong controls on Our use of your data for direct marketing purposes including the ability to opt-out of receiving emails from Us which you may do by unsubscribing using the links provided in Our emails.

Your Right to Withhold Information

You may access certain areas of Our Site without providing any data at all. However, to use all features and functions available on Our Site you may be required to submit or allow for the collection of certain data.

You may restrict Our use of Cookies. For more information, see section 13.

How Can You Access Your Data?

You have the right to ask for a copy of any of your personal data held by Us (where such data is held). Under the GDPR, no fee is payable and We will provide any and all information in response to your request free of charge. Please contact Us for more details at info@property118.com, or using the contact details below in section 14.

Our Use of Cookies

Our Site may place and access certain first party Cookies on your computer or device. First party Cookies are those placed directly by Us and are used only by Us. We use Cookies to facilitate and improve your experience of Our Site and to provide and improve Our products AND/OR We have carefully chosen these Cookies and have taken steps to ensure that your privacy and personal data is protected and respected at all times.

All Cookies used by and on Our Site are used in accordance with current Cookie Law.

Before Cookies are placed on your computer or device, you will be shown a cookie prompt requesting your consent to set those Cookies. By giving your consent to the placing of Cookies you are enabling Us to provide the best possible experience and service to you. You may, if you wish, deny consent to the placing of Cookies; however certain features of Our Site may not function fully or as intended. You will be given the opportunity to allow only first party Cookies and block third party Cookies.

Certain features of Our Site depend on Cookies to function. Cookie Law deems these Cookies to be “strictly necessary”. These Cookies are shown below in section 13.5. Your consent will not be sought to place these Cookies, but it is still important that you are aware of them. You may still block these Cookies by changing your internet browser’s settings as detailed below in section 13.9, but please be aware that Our Site may not work properly if you do so. We have taken great care to ensure that your privacy is not at risk by allowing them.

The following first party Cookies may be placed on your computer or device:

Name of Cookie

Purpose

Strictly Necessary

JSESSIONID

Used only to collect performance data, with any identifiable data obfuscated

No

__cfduid

This cookie is strictly necessary for Cloudflare's security features and cannot be turned off.

Yes

Our Site uses analytics services provided by Google Analytics and Facebook. Website analytics refers to a set of tools used to collect and analyse anonymous usage information, enabling Us to better understand how Our Site is used. This, in turn, enables Us to improve Our Site and the products AND/OR services offered through it. You do not have to allow Us to use these Cookies, however whilst Our use of them does not pose any risk to your privacy or your safe use of Our Site, it does enable Us to continually improve Our Site, making it a better and more useful experience for you.

The analytics service(s) used by Our Site use(s) Cookies to gather the required information.

The analytics service(s) used by Our Site use(s) the following Cookies:

Name of Cookie

First / Third Party

Provider

Purpose

__utma, __utmb, __utmc, __utmt, __utmz

First

Google

Helps to understand how their visitors engage with our website

_fbp

First

Facebook

Helps to understand how their visitors engage with our website

In addition to the controls that We provide, you can choose to enable or disable Cookies in your internet browser. Most internet browsers also enable you to choose whether you wish to disable all cookies or only third party cookies. By default, most internet browsers accept Cookies but this can be changed. For further details, please consult the help menu in your internet browser or the documentation that came with your device.

You can choose to delete Cookies on your computer or device at any time, however you may lose any information that enables you to access Our Site more quickly and efficiently including, but not limited to, login and personalisation settings.

It is recommended that you keep your internet browser and operating system up-to-date and that you consult the help and guidance provided by the developer of your internet browser and manufacturer of your computer or device if you are unsure about adjusting your privacy settings.

Contacting Us

If you have any questions about Our Site or this Privacy Policy, please contact Us by email at info@property118.com, by telephone on 01603 489118, or by post at 1st Floor, Woburn House, 84 St Benedicts Street, Norwich, NR2 4AB. Please ensure that your query is clear, particularly if it is a request for information about the data We hold about you (as under section 12, above).

Changes to Our Privacy Policy

We may change this Privacy Policy from time to time (for example, if the law changes). Any changes will be immediately posted on Our Site and you will be deemed to have accepted the terms of the Privacy Policy on your first use of Our Site following the alterations. We recommend that you check this page regularly to keep up-to-date.

Report this comment

Sorry. You must be logged in to view this form.

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents